Bill Kristol, Gold Bug

One of the really shocking things about the modern American conservative movement is that it contains many influential figures whose thinking about public policy is of lower quality than Bill Kristol’s. His latest notion is that we should side with China against Ben Bernanke and then adopt a gold standard:
China hawks and American hegemonists (I’m both) will be tempted to jump on this statement as a challenge to the U.S., which in a way it is. But it’s worth overcoming for a minute our (justified) distaste for the Chinese regime, and pausing to ask this: Isn’t Hu in this one respect right? And does the current international currency system of fiat money, with the U.S. as the reserve currency, serve U.S. or world interests?
And it’s worth further asking–as more and more people are beginning to ask–whether a modernized international gold standard, which anchors currencies to a standard outside government manipulation, wouldn’t better serve the interests of free and limited government both at home and abroad. After all, it’s the dollar’s status as a reserve currency that has allowed the U.S. government to amass huge debts, debts which the legislatively imposed debt ceiling has been unsuccessful in limiting. Fiat currency seems to be related to bloated and unlimited government, and to speculative bubbles, and to international instability. Do we just to have to live with this, or simply hope for better Fed chairmen?
If Kristol seriously thinks there were no asset price bubbles or market panics before FDR took us off the gold standard, then he really needs to think harder. Like how did FDR get elected? And why did he take us off the gold standard?
But beyond the specific facts, it’s the logical structure of the argument that’s insane. Economic growth is a key predicate for an expansive welfare stare. So it’s completely true that if you just started throwing out the key institutional features of modern market economies that you’d strange big government. But you’d be strangling big government by destroying the economy. Why do this? It’s like economic conservatism as a religion, with small government a totem to worship at.

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Today’s economic conditions reflect a fiat monetary system held together by many tricks and luck over the past 40 years. The world has been awash in paper money since removal of the last vestige of the gold standard by Richard Nixon when he buried the Bretton Woods agreement — the gold exchange standard — on August 15, 1971.
Since then we’ve been on a worldwide paper dollar standard. Quite possibly we are seeing the beginning of the end of that system. If so, tough times are ahead for the United States and the world economy.

China has been making moves to replace its trade in dollars with trade in the renminbi. The Chinese trade in renminbi is going to be worth nearly 30% of their international trade by 2020, according to a research note by Standard Chartered's Becky Liu and her team. This is projected to be worth $3 trillion.

Authored by John Cochran via The Circle Bastiat blog, For those following Bitcoin, this interview with Gavin Andresen, the 46-year-old lead software developer for the Bitcoin project in today’s Wall Street Journal should be of interest. Bitcoin vs. Ben Bernanke

My interest in the world of politics began in large part on Sunday, August 15, 1971. For decades, I, like all Americans, had lived in a country where it was illegal to own gold. The idea probably seems preposterous today, but there was a time when the government seized all the citizens’ gold and declared gold illegal to own.
It had not even taken a decade for the entirely unbacked fiat paper dollar Nixon created to wreak serious economic havoc.

In the past week much has been written about the emerging distinction between the Cypriot Euro and the currency of the Eurozone proper, even though the two are (or were) identical. The argument goes that all €'s are equal, but those that are found elsewhere than on the doomed island in the eastern Mediterranean are more equal than the Cypriot euros, or something along those lines.

Due to a set of improbable contingencies, the main subject I have actual factual knowledge of is the history of France in the 1789-1871 period. Consequently, I’ve been confused by the tangled web of Napoleon metaphors that have been spun around health care.